Budgeting Lets Create a Budget for Jays Jean

Budgeting Let’s Create a Budget for Jay’s Jean Junket Business! n Why and how to create a budget

Why a budget is necessary n n n Keys to success Forces one to realize how much they make and how they spend that money Plan to succeed – don’t fail to plan

What’s in a Budget? n Income • Money that is made or brought into your operating system. This could be your personal finances or a business. n Expenses • Money that is spent. Any thing that you have to buy – planned or unexpected are considered expenses.

Income n n Planned Income Regularly get it (monthly/bi-weekly) • • n n A job An allowance Social Security Check Welfare Unplanned Income A surprise/unexpected • • • Lottery Birthday/Gifts Tax return

Expenses n n Planned Expenses Have every month • • n n Rent Car payments Insurance Food Unplanned expenses Are not expecting • • • Car repairs Medical injuries Home repairs

Creating a Budget n On Left – Income • Make a list of all ones income that is regular income. It must be income that you will get every month. n On Right-Expenses • Make a list of all the items that you have to pay for every month. Some have exact amounts (rent) and some can only be estimates (fuel) Estimate as close as possible

Create a Budget! n n Income School wages • $1200 n Savings interest • $50 n Delivering papers • $100 n Total Income • $1350 n n n n n Expenses Rent Insurance Car payment Food Fuel Savings Miscellaneous Total Expenses $400 $250 $300 $100 $ 50 $1350

Tips for Creating a Budget n The budget must balance! • The income must equal the expenses. If you make, you must have a ‘destination ‘for that money! • That does NOT mean you MUST SPEND it. Planning to put money in some type of savings account is a GREAT idea. • The Income MUST EQUAL Expenses!!

Jay’s Jean Junket n Welcome to Jay’s Jean Junket! Jay is a custom designer who makes blue jean jackets. He/She has three designs that are shipped to seven different stores every month. Jay has asked us to help set up a budget so Jay can save money to expand the size of the building.

Jay’s Income n n Butterfly Jacket $45 Straight line Jacket $40 Denim and Lace Jacket $50 Each of the seven stores have standing monthly orders for all three jackets. They all receive 20 jackets of each style every month. This is Jay’s only source of income. What is Jay’s monthly income?

Jay’s Income n If you said “$18900, ” then you are correct! This is Jay’s monthly fixed income. . . the amount of money Jay expects to bring in every month.

Jay’s Expenses n n Building payment $2000 (only 12 pmts left) Utilities $1200 (This is an average of last year’s monthly payments) n n n Wages $4600 (Two full time/ one part time helper) Insurance $1800 Shipping $1000 Supplies $4000 Miscellaneous $500

Jay’s Expenses n n n Add up Jay’s fixed or planned on expenses. What do you get? If you got “$15100, ” then you are correct! How should Jay balance the budget in order to someday expand the building?

Jay’s Budget n n Why will Jay have to create a new budget this time next year? Because the building will be paid for.